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Company not criminally liable for an offence by the management board

A collective entity may not be held responsible for a crime committed by the members of its managerial authorities.

In a judgment dated 6 April 2011 (Case No. V KK 15/11), the Polish Supreme Court held that “there are no grounds to find criminal liability of a collective entity for an offence committed by members of the body managing the entity.” The court once more found that under the Act on Liability of Collective Entities for Punishable Offences dated 28 October 2002, in its current wording, a company may not be held liable for commission of a criminal offence by a member of the management board.

The judgment was issued by the Supreme Court in a cassation appeal filed by the Prosecutor General from a final judgment holding a limited-liability company liable for a fiscal offence committed by the president of the company’s management board, consisting of failure to pay over to the tax authority a tax collected by the company. The Prosecutor General alleged that the judgment violated Art. 3 and 5 of the Act on Liability of Collective Entities by erroneously holding that these articles could serve as grounds for the company’s liability.

The act governs liability of collective entities, such as companies, for tax crimes and other criminal offences. Liability under the act is not regarded as criminal liability in the strict sense, but because the sanctions under the act have a punitive element, liability under the act does share certain characteristics of criminal liability, including a requirement of a form of “guilt” on the part of the collective entity.

In order to hold a collective entity liable under the act, three conditions must be met: (i) A person who is connected to the collective entity in a manner indicated in the act must be convicted of committing an offence identified in the act (in a legally final judgment or other determination referred to in the act that contains the element of a finding of criminal liability for the offence, such as a conditional discontinuance of the criminal proceeding). (ii) The collective entity must obtain a benefit from commission of the offence. (iii) Commission of the offence must result from the fault of the collective entity in the form of lack of due diligence in selection or supervision of the person who committed the offence.

The “guilt” of the collective entity follows from the last of these conditions. However, under Art. 5 of the act, the condition of fault by the collective entity in selecting or supervising the person who committed the offence refers to two of the three categories of persons indicated in the act (Art. 3 (2) and (3)) whose conviction may serve as grounds for liability of the collective entity, namely persons permitted to act as a result of exceeding authority or failing to perform a duty on the part of persons managing the collective entity, or persons acting for or in the interest of the collective entity with the consent of the persons managing the collective entity. The provision concerning fault in selecting or supervising the person committing the offence thus does not apply directly to a person managing the collective entity, i.e. a person referred to in Art. 3(1) (a person “acting for or in the interest of a collective entity within the scope of authority or duty to represent the entity, take decisions for the entity or exercise internal control, or in excess of such authority or failure to perform such duty”)—a category which includes members of a company’s management board.

The conception of criminal liability of collective entities and the current wording of Art. 5 of the act were the basis for the ruling by the Supreme Court. The failure to indicate in the act that the offence must result from fault on the part of the collective entity in selecting or supervising the person, with respect to offences committed by the persons managing the entity, without indicating other grounds for liability of the collective entity, means that the collective entity cannot be held liable for an offence committed by members of the managing body. Otherwise, the collective entity would always be liable if an offence was committed by a manager, and the entity could not assert in its defence that it was not at fault in selecting or supervising the manager. This would automatically attribute the guilt of the individual who committed the offence to the collective entity. This would objectify the liability of collective entities, which is impermissible under constitutional standards which require fault as a condition for imposing punitive sanctions.

The holding by the Supreme Court in this case is consistent with the established view in the case law and scholarship. The issue was thoroughly examined before in the Supreme Court judgment dated 5 May 2009 (Case No. IV KK 427/2008), and the same result was reached in two Supreme Court judgments dated 11 April 2011 (Case No. V KK 27/11 and V KK 57/11).